TVS BMW partnership gets going

BMW and TVS have inked a technology agreement whereby the two would partner to make a range of motorcycles in India designed and engineered by BMW. This brings to a head the intense discussions underway since the last year and a half with the German bike maker trying to find a foothold for lean low cost manufacturing in Asia just as Ducati and Triumph have embarked on the same in Thailand in recent years.

However, unlike the other two European bike marques from Italy and England respectively who have gone in without any local Asian partner, BMW’s move is in diametrically opposite as it has sought a partner to spearhead its intent for the low cost emerging markets. For quite a long while BMW Motorrad had been searching high and low for a partner capable of large volume production along with high consistent quality and after months of discussions and evaluations, the German car and bike maker was pretty impressed with the Hosur-based bike maker’s technical acumen, attitude and approach to two-wheeler manufacturing.

It is very early days yet but the deal envisages TVS to manufacture a range of motorcycles and scooters below 500cc for a completely new genre of motorcycles which would be sold not just in India and Asia but all over the world. This signifies the changing face of motorcycling as we have been advocating for a long time. It is not about hyper machines capable of splitting the atoms and zipping at the speed of light. Rather it is a back to basics creed where easy handling, pleasure delivering smooth torquing machines in decent displacement sizes help deliver an all new feel to riders across all ages.

That this sort of performance will yet be stylish and modern but without punching a big hole in the pocket is why the likes of Honda, Kawasaki, Bajaj and KTM have already shown their hand with just such an interpretation of this concept and with Triumph expected to come up with a 400-500cc twin made in Asia for the world, BMW’s move to rope in TVS as a low cost manufacturing outpost is just the right way forward for both partners. Quite natural this because not only product development but also product manufacturing costs have made manufacturing a very costly game in Europe and this more than anything else along with the new age “small on displacement, big on performance” mantra made it imperative for BMW to search and then zero in an Indian/Asian partner and TVS fits the bill very well.

Many did think that the way forward to a low cost BMW motorcycle would have been via the Husqvarna brand which BMW owned till about a couple of months ago but the new thinking within the corridors of power in Munich has dictated that there would be a whole new range of entry level bikes sporting the blue and white propeller logo and that while they would be competitively priced, they wouldn’t be low rent. To many it might seem as if this is an entirely new arena Munich is wading into but the fact remains that it has been present in this segment before as well. If one cares to look at its model portfolio through the ages, it had made single and twin-cylinder machines in capacities ranging from as low as 200cc and 250cc respectively!

BMW’s technical agreement with TVS will see the duo work together on the development and production of a range of two-wheelers with engine capacity under the half-litre mark. It has been quite clear that in recent times, the lack of a strong technology partner had been perceived rather painfully for TVS but the might of BMW could help revive its fortunes. Related: BMW to link up with TVS via its Husqvarna brand?

This isn’t to say that everything would be up and running from tomorrow but that this announcement today is just the precursor to much more intensive effort by the two brands as they start the tough process of integrating minds on the type of bike, the amount of sophistication needed for different markets, the importance of product differentiation while sharing aggregates and also perfecting the back-end of the business – the last two being very important ingredients which the Bajaj – KTM partnership has perfected and continues to build upon! As one sees it, and also while speaking to many experts from Munich and Berlin, first products aren’t expected till 2018-2020 by which time not just a meeting of minds but also perfecting systems and processes at Hosur and Mysore would be accomplished.

Speaking on the partnership, Stephan Schaller, President BMW Motorrad said: "In view of changing motorcycle markets, demographic developments and increasing environmental demands we are expanding our product range so as to tap into fresh growth potential. We have a highly expert and experienced partner in the TVS Motor Company. This means that in future we will be able to offer vehicles in smaller capacity classes in addition to the BMW Motorrad core segments. Various types of motorcycle are conceivable. They will meet the expectations of a BMW motorcycle in terms of riding fun as well as setting a new benchmark when it comes to stability, agility and performance figures. I regard this long-term cooperation as an important step along the road to profitable, sustainable growth."

TVS Motors, the country’s fourth largest bike maker, has been undergoing tough times over the past couple of years with its rivals establishing positive ideologies around their premium products and being rather proactive in the market with genuinely new and better engineered machines, an area in which TVS has been struggling to find a proper footprint.

The technology deal with BMW is probably the best thing that could have happened to TVS, delivering it access to new age design, production engineering and more importantly the capability to once again work with a world leader. The tangible as well as the intangible benefits accruing to Hosur would be manifest and could have a strong positive impact from this year on itself. That it needs a halo flagship offering in its product portfolio goes without saying and the quicker it gets to grips with this situation the better it would be for its bread and butter line-up that it just survives on.

Venu Srinivasan, Chairman TVS Motor Company did hint at just this line of thought when he stated: "With BMW Motorrad, we see an ideal long-term strategic partner who shares our core values: focus on quality, engineering prowess, innovation and customer satisfaction. We intend to leverage each other’s strengths to deliver a new series of products offering cutting edge technology for our customers."

For BMW Motorrad, the new partnership means an entry point into the second largest two-wheeler market in the world and an opportunity to reap benefits of low-cost manufacturing from India for its export markets – replicating the Bajaj Auto-KTM partnership approach. Considering there is no equity sale or purchase undertaken between the TVS and BMW tie-up, it will purely be a technical partnership for developing low-cost sub-500cc products for Indian as well as global markets. BMW Motorrad, which currently has almost no presence in the huge Indian market, will get an opportunity to invade and tap the 300-500cc segment in India. The key to everything though would be how effectively the two would be able to produce bikes with shared mechanical aggregates yet having core differentiation given their brand equity in the motorcycling space.

The press release does hint about this very fact when it states: “The co-operation agreement involves the two companies each offering their own vehicle derivatives, which will be sold through their own distribution channels in India and across the globe”, which in simpler words means that the partnership will jointly develop sub-500cc machines that will be separately branded and marketed by TVS and BMW Motorrad via their own individual distribution channels in India as well as abroad.

This isn’t a new way of doing business for BMW because it had earlier designed and developed the 650cc single-cylinder Rotax engine that powered the F650 Funduro motorcycle (the same one which Hero Motors attempted to sell at an exorbitant price in India) in the 1990s which again was manufactured not by BMW in Berlin but was contracted to Italian bike maker Aprilia which made at its Noale facility in Italy. I see many shades of such a move but while the manufacturing concept might remain similar to a great extent, the genre of machine will be all new and very welcome.

Stay tuned for more.